To have a true idea of the debt and how to tackle it make a list of what money is incoming and what you owe.
Draw up a budget
Budgeting is not a hard as it sounds its about watching your outgoings and your incoming. Draw up a budget and monitor where you money is going. Then make a note of it, you may be surprised that Star bucks coffee you have every day on the way to work adds up to a princely sum. For example 3 dollars a day for the average month equals $720 dollars a year. It all adds up.
Who has the highest interest?
Pay off the debts which have the highest interest. You will save more in the long run as the interest grows at a faster rate, also keep up with the payments of the others outstanding.
Avoid P*y day L0ans
They are legal extortion some with APR of over 250% compared to around 16% or less for other types of borrowing. (Thanks Russell who approached Home Life Weekly about payday loans and now I receive spam from these companies in particular www.paydayloans.co.uk www.paydayloans.com, www.yesloansuk.com provident personal credit loans. This is what you get for being true to your beliefs and saying no to extortionate interest rates.)
Pay more than the minimum interest on your credit cards
Paying just the minimum of debt normally just covers the interest, and makes very little impact on the principal
Use your savings
It is always a good idea to have a buffer of cash, but it doesn’t make financial sense to save money on one hand, when you are carrying big debts in the other.
Talk to the Lenders
If you are having real financial difficulties talk to your creditors. You will probably find they may be able to revise your repayments, freeze the accruing interest or maybe extend the time you have to pay. However don’t stop making repayments without warning.
Cut up credit cards
Taking the scissors to the plastic card is a great way to stop the rot. If you insist on keeping a card, limit it to just one or better still use a debit card, which only draws cash from your bank account.
Protect your income
Paying for our homes, family and lifestyles doesn’t leave us with a lot of spare cash. But when you are carrying a lot of debt, income protection insurance is a must. Just is case of job loss or illness. Also check how long you have to wait before the payments starts as you will have to find the money to keep yourselves afloat. And don’t under insure yourselves. If the policy is in joint names check the status of the policy as sometimes it will only payout half the income.
Seek professional help
Debt can put pressure on family finances and the family itself. Getting professional assistance from financial counselors can help. Remember lots of these services are free and these people know a lot about dealing with debt.